Exhibit 7.1
Computation of Ratios of Earnings to Fixed Charges
Year Ended December 31, | |||||||||
Korean GAAP | 2004 | 2005 | 2006 | ||||||
(Millions of Won) | |||||||||
Earnings: | |||||||||
Net earnings | 1,282,216 | 1,085,450 | 1,291,863 | ||||||
Income tax | 577,889 | 387,280 | 490,046 | ||||||
Income from equity investees | (11,310 | ) | (11,204 | ) | (8,685 | ) | |||
Dividend from equity method affiliates | 333 | 2,247 | 1,247 | ||||||
Fixed charges | 708,364 | 639,073 | 518,389 | ||||||
Less interest capitalized (a) | — | — | — | ||||||
Minority interest in earnings of consolidated subsidiaries | 148,931 | 274,586 | 217,854 | ||||||
Total earnings | 2,706,423 | 2,377,432 | 2,510,714 | ||||||
Fixed charges: | |||||||||
Interest expense | 678,514 | 616,540 | 503,244 | ||||||
Capitalized interest (a) | — | — | — | ||||||
One-third of rent expenses on operating leases, deemed to be representative of interest expense | 29,850 | 22,533 | 15,145 | ||||||
Total fixed charges | 708,364 | 639,073 | 518,389 | ||||||
Radios of earnings to fixed charges | 3.82:1 | 3.72:1 | 4.84:1 | ||||||
U.S. GAAP | |||||||||
Earnings: | |||||||||
Net earnings | 1,404,616 | 1,148,534 | 1,329,343 | ||||||
Income tax | 386,934 | 356,109 | 357,090 | ||||||
Income from equity investees | (36,136 | ) | (234,868 | ) | (104,336 | ) | |||
Dividend from equity method affiliates | 45,153 | 51,549 | 55,031 | ||||||
Fixed charges | 467,365 | 417,658 | 379,017 | ||||||
Less interest capitalized | (12,154 | ) | (7,339 | ) | (9,169 | ) | |||
Minority interest in losses of consolidated subsidiaries | (1,760 | ) | 6,787 | 93,874 | |||||
Total earnings | 2,254,018 | 1,738,430 | 2,100,850 | ||||||
Fixed charges: | |||||||||
Interest expense | 455,211 | 410,319 | 369,848 | ||||||
Capitalized interest | 12,154 | 7,339 | 9,169 | ||||||
One-third of rent expense on operating leases, deemed to be representative of interest expense | — | — | — | ||||||
Total fixed charges | 467,365 | 417,658 | 379,017 | ||||||
Radios of earnings to fixed charges | 4.82:1 | 4.16:1 | 5.54:1 |
(a) | Effective on January 1, 2003, in accordance with Korean GAAP, the Company elected to no longer capitalize interest costs on all borrowings incurred related to qualifying assets. |